CURRENCY MARKET WRAP
As of Thu Oct 31st, Singapore Time zone UTC+8
U.S. Dollar Index, -0.24%, 97.45
USDJPY, -0.09%, $108.79
EURUSD, +0.36%, $1.1152
GBPUSD, +0.26%, $1.2901
USDCAD, +0.58%, $1.3163
AUDUSD, +0.47%, $0.6897
NZDUSD, +0.82%, $0.6408
U.S. Advance Q3 GDP report showed output rising at an annual rate of 1.9% (consensus 1.5%) following the 2.0% growth rate seen for the second quarter. The GDP Price Deflator was up 1.7% (consensus +2.0%) following a 2.4% increase in the second quarter.
ADP Employment Change report showed an estimated 125,000 jobs (consensus 95,000) were added to private sector payrolls in October, all of which were in the services-providing sector. The better than expected October number was offset by a downward revision for September to 93,000 from 135,000.
Fed lowered the policy interest rate by 25 basis points to a target range of 1.5% – 1.75% (as expected). The decision was dissented by Kansas City Fed President George and Boston Fed President Rosengren, both of whom also voted against the prior two rate cuts. Powell said the Fed would need to see a significant rise in inflation to increase rates but noted that expectations for inflation are at the lower end of historic ranges. “We took this step to help keep the US economy strong in the face of global developments, and to provide some insurance against ongoing risks,” Powell told reporters.
In trade, Separately, Treasury Secretary Steven Mnuchin told The New York Times that the U.S. and China are still on track to sign part one of a trade agreement next month. The affirmation came after Chile said it will not host the APEC summit, where both sides were expected to sign the agreement, due to ongoing protests in the country.
Bank of Canada kept its key interest rate on hold at 1.75% (as expected) Wednesday to position the country as an exception among advanced economies that have already started responding to a fading global economy. Governor Stephen Poloz’s team says the domestic economy has held up well in many respects and inflation has been close to target. They warn, however, that Canada isn’t immune to the negative effects of slowing global growth. To guide its future decisions, the central bank said it will monitor any changes to Canada’s sources of strength, especially consumer spending and housing markets. It also plans to watch for the roll out of expected fiscal support from the federal government and its timing. The recent election campaign featured promises of multibillion-dollar income tax cuts, which could help lift the economy. Fiscal support would also provide breathing room for the central bank. Any move to lower borrowing rates would risk fuelling Canada’s already near-record levels of household debt.
The 2-yr yield declined two basis points to 1.62%, and the 10-yr yield declined four basis points to 1.80%. The U.S. Dollar Index declined 0.24% to 97.45.
South African Rand collapsed (-2.47%) after investors were presented with the stark reality of what bailouts for the embattled state power utility will cost South Africa. A combination of bailouts for government firms, declining economic growth and falling tax revenue will cause the budget deficit to widen to 5.9% of gross domestic product in the fiscal year.
STOCK MARKET WRAP
S&P500, +0.33%, 3,046.77
Nasdaq, +0.33%, 8,303.98
Nikkei Futures, +0.02%, 22,932.5
Eight of the 11 S&P 500 sectors finished in positive territory with five sectors increasing between 0.6% (consumer discretionary) and 0.9% (utilities). Conversely, the energy sector (-2.1%) was undercut by lower oil prices ($55.08, -0.68, -1.2%) while the lower Treasury yields, and curve-flattening activity, pressured the financials sector (-0.1%).
Apple beat Wall Street’s expectations on revenue and earnings, even as iPhone sales came in lighter than expected. Total revenue was up, partially due to 18% growth in Apple’s services business and 54% growth in wearables, including the AirPods. EPS: $3.03 vs. $2.84 estimate. $64 billion vs. $62.99 billion estimate. iPhone revenue: $33.36 billion vs. $32.42 billion estimate. Services revenue: $12.51 billion vs. $12.15 billion estimate. Apple stock was up slightly in after-hours trading.
Facebook rises (+4.46%) on better-than-expected revenue and earnings. Facebook has turned to its Stories features for growth as it focuses more on new areas and less on the core News Feed. The company is under intense pressure from regulators on issues related to privacy, fact-checking political ads and its new cryptocurrency. Earnings: $2.12 vs. $1.91 estimate. Revenue: $17.65 billion vs. $17.37 billion estimate. Daily active users: 1.62 billion vs. 1.61 billion estimate. Average revenue per user: $7.26 vs. $7.09 estimate.